Learning After Doing

Feed the Gorilla

Talking to a trusted colleague today about sticky situations where the full court press may be on against you, I garnered some good advice. Full court press? That's a situation where extra pressure, scrutiny, or investigation may be conducted. Although I believe these situations are good and make us better, there are times when a bad result can be devestating to a person or an organization.

He relayed his experience to me: spend some time getting to know the other person. Or, simply shoot the bull with them. "If a gorilla is hungry to eat you, go ahead and feed it something else for a while and make it happy. Then, the gorilla probably will forget he wanted to eat you."

If I can show genuine interest and care in the other person, the likelihood that they will make it tough on me diminishes because a name, a face, a story is now associated. Without this context, the full court press will be done by an investigator who doesn't care what the ramifications of his actions are because no one he knows will be affected. In context, the investigator will be careful to help and not to hurt his friend.

Need a Pay Raise?

Desperate"The more he produces, the more his services are worth..." for an increase in wages? Need a little extra in each pay check? Who isn't?

Continuing on my P-MBA, I am finishing Economics in One Lesson. Essentially, Hazlitt builds strong evidence for a fiscally conservative government-the smaller, the better. Here is an excerpt that will help me in discussions on politics, wages, outsourcing, day-labor, and education. It also describes how to get that long awaited pay increase.

We cannot distribute more wealth than is created. We cannot in the long run pay labor as a whole more than it produces.

The best way to raise wages, therefore, is to raise marginal labor productivity. This can be done by many methods: by an increase in capital accumulation-i.e., by an increase in the machines with which the workers are aided; by new inventions and improvements; by more efficient management on the part of employers; by more industriousness and efficiency on the part of workers; by better education and training. The more the individual worker produces, the more he increases the wealth of the whole community. The more he produces, the more his services are worth to consumers, and hence to employers. And the more he is worth to employers, the more he will be paid.

Put Up or Shut Up!

Marketing and selling, but delivering? Delta spends a tremendous amount of money marketing their offering through a website redesign, on-hold messages, pamphlets, billboards, and radio spots. Why? Justify higher ticket prices? Retain its base of customers? Encourage new customers to choose Delta over low-cost carriers?

I have not seen higher ticket prices at Delta as compared to archrival low-cost carrier Airtran.

Therefore, the justification must be to fill seats. Keep talking about how dreamy it is to fly Delta. But when anyone who hears/reads/views/clicks any of the facets of the marketing campaign actually flies Delta, the dreamy feeling they have is quickly sucked out the cabin door.

What Delta continues to deliver is a commodity: a cheap airline seat. Although their marketing campaign suggests that Delta is different, the product/service they provide has no differentiation from any other carrier. (After all, when I’m on an Airtran flight, they offer satellite radio for my dreams. Airtran actually delivers more.)

I am not writing this to rant about Delta. I continue to choose Delta (even though they continue to fall short of expectation.) But, they have taught me a valuable lesson.

I would like to suggest that it is better to not market at all than to market a product or service or feeling that you cannot deliver. Failing to deliver stirs negative emotions. Negative emotions over time influence purchasing decisions. When offered a viable alternative, the purchaser will choose against the provider that is associated with negativity. So, a competitor like AirTran has a much easier time enticing travellers to switch.

The challenge for any organization is to align marketing, sales and operations so that  they all market, sell and produce the same thing. Otherwise, the purchaser will at some point, through disappointment, choose a different provider. (After all, I expected a dreamy experience on the Delta flight, but the airplane was the same old plane with the same old boring reduced service.) The marketers will wonder where the market share went. The salesmen will lose respect in the marketplace. The operations team will blame the marketers and sellers for reduced volume. All will end up with reduced pay (or pink slips) and a struggling employer.

Make your ads slick, your website fascinating, your message compelling, your buildings gleaming, your pitches flawless, but if you deliver less in the actual service or product you provide, you’ll continue to watch the backs of your customers as they choose other providers.

Dog Fight

Business isn't necessarily a dog fight: one-on-one. But a dog fight that is a more traditional pack of wild animals fighting over the last scraps of meat left on a bone. Here is my take on how the dog fight tends to fall in the nature.

Mature Markets-Mature Customers: this seems to provide the best volume, or contribution margin because it is generally a known quantity and is mature because experience and growth have taken it to a peak that has been sustained. Usually, it is a market where everyone of the suppliers considers this a target, and if any, even one, is a new player, the market will be ugly because everyone will be a whore, selling out margin dollars for volume. The old guy needs to maintain this business to sustain equipment for other business; the new guy needs to get this business to justify the multi-million dollar investment just made.

Mature Markets-New Customers: this seems to be the riskiest, most time consuming, and least pay-out of all the customers. We'll see lots of write-ups in the trade magazines with the big splash the new customer made with their new line of items, but they haven't yet created shelf space or customer loyalty. All the press seems to add up to lots of attention from other suppliers, but volumes are low, and growth is slow and long-term. And chances are, if they get big enough to be a player, they'll bid out the business any way. Why waste the time here?

New Markets-Mature Customers: this is one of my favorite segments to play in. This means getting in with a current contender who is developing new lines or items, new business that it didn't play in before. Usually, this customer will have sufficient experience and "pull" to get their items stocked, brand recognition transferred quickly, and supply and delivery chains sufficient to handle the growth. By being the supplier of choice when the product is developed, you are the incumbent and have the best chance of maintaining the business at least into the first bid process. Why? Buyers are unwilling to mess with something unfamiliar that has good success so they leave it alone for a couple of cycles until enough time has lapsed to prove other supply sources. All that also means greater margins and better returns.

New Markets-New Customers: who knows? this is the segment that can be boom or bust, and typically bust. 50% of small businesses fail within the first year and 80% within the first five years. But some time should be given to these players. The most ideal is to provide them an off-the-shelf solution so your cost and risk in their startup is very minimal. But, they should see you as the sympathetic supporter helping them along. Then, for the 20% that are successful, and the 2% (guess) that hit it big, you are the long-term supplier that they will always turn to. Consider the McDonald's-Coke relationship. There is no contract, just "a common vision and a lot of trust."
 

AI

No Artificial Intelligence in our industry; no, Avian Influenza is all the hype right now. And not just for those of us in the chicken industry. Tom Peters continues to write about it. On Drudge tonight, there were 7 headliners and a photo regarding AI. The WHO says that it is inevitable; the World Bank suggests the cost to the world economy may be over a trillion dollars.

People are always asking me about it, so I thought I'd write a little something so you can understand better and tell your friends about it. I'll do my best to make it simple.

Wild birds (avian) carry a range of influenza (flu) viruses with them naturally. Some bird flus are not very potent (low pathogenic) and some are very deadly (high pathogenic). There are a bunch of types (144 different strains possible) but the wild birds are usually unaffected by them. They do however transmit them to other animals through their mucous or fecal matter. Domestic or farm birds get them and can get sick from them.

So, for example, a migrating bird is flying south over Asia in the fall and defecates on the ground where chickens are being raised. A chicken eats its feed straight off the ground, swallows some fecal material, gets sick, and passes it around to the other birds on the farm. The farmer may even take the affected bird into a live market to be sold. In this live market, other birds can be infected quite easily.

When a bird flu is discovered at a farm in domesticated birds, the appropriate response is to kill all the birds in that flock. This prevents other birds from being infected and reduces the spread of that strain of bird flu.

For most bird flus, humans are not affected. (Other influenza strains are more common in humans.) What is so scary about the strain found in Asia in 2003 and still present there today (H5N1) is that it is deadly for the birds and is capable of infecting humans who come in contact with infected birds. In addition, the infected humans are dying at almost a 50% rate of known infection. The WHO, the World Bank, the President of the USA and others are afraid that if it ever mutates into a form where humans can be infected by contact with other humans, it could have devastating effects.

Critical things have to happen before doomsday can occur. 1.A wild bird must infect a domesticated bird like a chicken. 2.That chicken must infect a human. 3.That human needs to also have a strain of human flu at the same time that is easily transmitted to other humans. 4.Those two flu viruses must combine and mutate. 5.The new virus must still be deadly AND 6.easily transmitted among humans. If those all happen, then doomsday could occur. I fully agree. Millions dead around the world. Economies crippled. World travel and tourism halted. Our industry bankrupt. And there is nothing you or I can do about it.

In the USA, we grow our chickens in enclosed buildings called growout houses. So, there is almost zero risk that any of our commercially raised chickens will be infected by this bird flu from migrating birds. However, in Asia, live markets are prevalant and many citizens have chickens in the backyard. People love their chickens. These are fertile grounds for bird flu to enter chickens, transmit to other chickens, and transmit to people. So, anywhere domesticated birds are raised outdoors presents potential problems. In France, where free range chicken growing is a big industry, the government forced the growers to bring the flocks indoors to protect them from migratory birds. The USDA and the chicken industry in the USA are trying to enact a ban on all cock fighting in the USA to reduce the mobility of birds outside the commercial industry. More of this type action needs to occur.

The issue does not lie within the domestic commercial chicken supply. Instead, it lies in communities that have active live markets. Our chickens in the USA will not get sick and therefore will not get any of us sick; instead, a live chicken will infect a human in a live market who will infect ten others, that person will get on a plane from Hong Kong to L.A. where they will have infected 300 people on the plane and then the deadly flu will spread across the globe. Chickens in the USA have nothing to do with the chain of events and will not be impacted.

Instead, people will be afraid that eating chicken meat will possibly infect them or their family so they will quit eating chicken. This is a purely emotional decision and not one based on any facts. Consider how unfounded people act this story from Italy (see below.) Even if a chicken did have AI, fully cooking the meat would kill any virus present.

Despite all these explanations, the alarm in Europe has not receded. In Italy, two first division football clubs, Bologna and Udinese, announced Tuesday that due to the avian influenza cases detected in Turkey, Greece, and Romania, they were withdrawing all poultry products from the food menus offered in their stadiums. Italy's Health Minister Francesco Storace sharply criticised the measures, calling them "an incredible stupidity" that convey "a devastating message of fear."

In addition, I do not agree with those that say the pandemic is a certainty. If nations around the world will prevent live markets (update from China:they did), cock fighting, importing wild birds without testing them for flu viruses, outdoor raising of poultry and backyard chicken coops, then the likelihood of a person with the human flu ever getting the bird flu at the same time is very slim. Even slimmer is the chance that those two flus will mutate into a deadly easily transmittable virus.

And finally, eat more chicken. Just do like you always do and wash your hands after handling raw chicken and make sure you cook it fully. Even if a pandemic occurs, carry on because there is nothing else you can do.

Lessons from Down Under

Kim Aukland from Gawlei, Austalia

We met Kim this week. She's from Australia, works for Orlando Wyndham, the owner of the Jacob's Creek brand of wines, and is here on "holiday". She manages 20 staff members in the cellar door (wine-tasting visitor's center) who market and sell their brand on location. I sat down after dinner and asked her a couple of questions.

What's the best business advice she ever received? "Treat every day as a new day." Her manager at McDonald's when she was 15 told her this. "If you hold on to the past, you'll never move on to the future."

FYI: The best part about working there is "drinking wine." She suggests the 1996 vintage as the best. She also suggests the 1999 limited release Shiraz-Cabernet. But, her favorite wine overall is the 1998 Jacaranda Ridge Cabernet Sauvignon. Also, one thing you probably never new, Orlando Wyndham controls 2500 hectares of vineyards in Australia (many different brands) but they are owned by the second biggest wine and spirits company in the world, Pernod Ricard. She also is a share holder in Fasta Pasta.

Embrace the Truth

Quotes found on my white board:

• Turbulence from the second floor of a chicken plant.
• Is your office in a tower? I bet you wish it were on top of a slaughter plant.
• Innovation comes when the marbles in your brain (rattling from the whole bird chiller below) align to form a beautiful pattern.
• What's a great day? Completing a deal for 1300 tons of rendered chicken fat.
• Tyson who?
• You sell financing for IPO's? I sell rooster saddles.

Every Possible Choice

Choices are great and the blog world we live in allows me to get a podcast or blog posting tailored to exactly my one time impulsive desire. Unfortunately, it's not like that outside of the digital world. Storing bytes on servers is relatively inexpensive, but I disagree with Seth Godin today who said "The cost of offering 40 kinds of cereal is close to zero. The cost to offering 100 kinds of tea is about the same."

1. Offering 40 cereals and 100 teas is novel, but it is inventory. Face it.
2. In the physical world, inventory takes space. 40 types of cereal bought in 12-pack cases is 480 cereal cartons.
3. Consider next that inventory costs money. Money not invested. Money not pocketed.
4. Supply chains have difficulty and incur additional costs when inventories are complex. Just think about the cook having to count each of 100 teas to make sure he won't run short before the next delivery truck arrives.
5. Why only 40 cereals? Why only 100 teas? On Wikipedia, I counted at least 170 cereal brands. Where do you stop?

From a purely marketing perspective, Seth is right on. However, the key to successful marketing is to balance reality and the cost of implementing the image you are portraying. As Mr. Parcher says to Mr. Nash in 'A Beautiful Mind', "Conviction is a luxury of those on the sidelines."

Thousand Words

If a picture is worth a thousand words, here are a thousand words from my conversation last night:

I was looking for some fun cards or quotes or cartoons at the Savage Chicken this evening when I ran across this cartoon. I couldn't help but laugh.

Business Guidance

In our world, there is the on-going debate regarding how to manage the business: which book, which philosophy, which guide, which quotes, which values? I am going to work on getting POTC's principles so that I can at some point develop them into workable material for the company.

Last night I was reading The Message (my goal is to read the New Testament straight through) and came across this quote from Paul in 1 Corinthians:

⁵⁰I need to emphasize, friends, that our natural, earthy lives don't in themselves lead us by their very nature into the kingdom of God. Their very "nature" is to die, so how could they "naturally" end up in the Life kingdom?

So many times we are faced with decisions that may have logical (natural) answers that may differ from the right answer. The approach to making the decision must come initially from biblical principles, not only the natural, as Paul hinted at to his audience. To me, this quote sums up much of POTC's discussion with me.